In India of 21st century, we certainly need radical changes in taxation system and the mindset of people associated with it. The reforms are needed both from the government and the taxpayer side.
Being a Chartered Accountant, many people (especially people from business fraternity) usually asks me how to save tax. But I always ask them to focus on increasing their revenues and consequently their income net of taxes. If the people of our country give just half the focus on increasing their business than on saving taxes, they will ultimately do a great service to themselves as well as the nation.
Though the government has reduced approximately 16% of the total pending tax cases. Seeing the cost benefit analysis, if the cost of collection is higher than the tax itself, then it is better to forego the same. This move of the government, aimed at improvising administrative efficiency and lowering cost of collection, will also ensure smooth refunds for assesses with such petty tax dues. The government through this will be able to prioritise bigger defaulters and at the same time there will be huge relief on government’s tax database. I hope that it is just a small beginning and the government will take number of such steps in the days to come.
Similarly, there are number of tax litigation matters pending at various judicial forums throughout the country. The government should take a holistic view of the same and take some major reforms-
1. An analysis should be done of the pending cases and the subject matter involved therein. Among them, all such cases where no big stake is involved, the government should withdraw such cases or make them redundant by amending the provisions. Similarly an appeal should be made to public to withdraw small cases for a larger public interest. It will not only save the precious time of judiciary but ultimately help the citizens of the country in getting timely justice.
2. The accountability of bureaucrats who frame the law should be fixed. The bureaucrats while framing the law should give proper clarification. There should not be dispute in its interpretation. The number of disputes against any particular law within one year from the date of its effectiveness should be the Key Performance indicator for the bureaucrats.
3. In order to reduce the cases burden on our courts, the government should have a larger public interest in its mind. Losing some lakhs or crore of rupees should not be a deterrent for the government for taking such decisions.
4. Going forward, in all the cases where both the parties are department of same government, they should not be allowed to move to court. The same should be deliberated in the council of ministers and decided accordingly.
5. The Chartered Accountants, other tax consultants as well as the tax authorities should work in synchronisation with each other and there should be focus in reducing litigation.
6. The government should keep on inserting clarifications wherever required to keep the spirit of law as well as reducing litigations.
By doing so, we would soon be able to minimise the burden of judiciary and save a large chunk of taxpayers money which goes waste in dragging unwarranted litigation.